The opinion of the court was delivered by: McDADE, District Judge.
Before the Court are Cross-Motions for Summary Judgment by
the parties (# 42-1 and # 46-1) and Defendant's Motion
Requesting Court to Take Judicial Notice (# 52). For the
reasons that follow, the Court grants Defendant's Motion for
Summary Judgment (# 46-1) and denies Plaintiff's Motion for
Summary Judgment (# 42-1). Defendant's Request for Judicial
Notice (# 52) is moot.
This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332.
The Millers are residents of the State of Arizona and
Taylor is a corporation having its principal place of business
in Rock Island, Illinois.
In Count I of the Plaintiff's Amended Complaint, the
Plaintiffs (Millers) assert that the Defendants, Taylor
Insulation Company and its president, Jon Nelson (hereinafter
Taylor), breached a contract between the parties by denying
benefits to the Millers under Taylor's medical reimbursement
plan. In Count II, the Millers seek punitive damages and
damages for emotional distress for willful and wanton denial
of the Millers request for payment of medical claims.
The Miller's original complaint alleged violations of ERISA
and breach of contract. On May 24, 1991, this Court entered an
Order dismissing Miller's ERISA claim.*fn1 Because Miller's
breach of contract claim was pendent to his ERISA claim, this
Court dismissed the breach of contract claim also.
Miller then filed an amended complaint under diversity of
citizenship jurisdiction. 28 U.S.C. § 1332. On October 11,
1991, Miller filed a Motion for Summary Judgment. Taylor filed
its Motion for Summary Judgment on November 20, 1991.
Miller began employment with Taylor in 1963. In 1973, Miller
became president and in 1979, was chairman of the board.
Defendant Jon Nelson was elected to succeed Miller as
President upon Miller's retirement. On November 8, 1979,
Miller retired and the parties executed a document titled
Taylor Insulation Company Consultation and Non-Competition
Agreement (Agreement). The Agreement entitled Miller to
participate in Taylor's sick-pay plan, the medical
reimbursement plan and the group life insurance plan which
were currently effective. The term of the Agreement was ten
years, commencing December 1, 1979.
Miller alleges breach of contract by Taylor in denying
reimbursement for Miller's medical claims and not paying the
claims as provided in the Agreement. The controversy before
the Court concerns Taylor's medical reimbursement plan. Miller
contends that paragraph 3(b) of the Agreement provided
benefits to Miller and his dependents. Taylor disputes that
the Agreement provided the "benefits" of the medical
reimbursement plan. It claims Miller was only "entitled to
participate" in a group health plan, and that actual coverage,
and the right to benefits, was determined by the group health
At the time the Agreement was entered into, Taylor's medical
reimbursement plan included a combination of benefits, some
provided directly by Taylor, and the remainder through a group
health insurance policy issued by Great West Insurance
Company. The parties do not dispute that the group health
insurance policies were a major component of Taylor's medical
reimbursement plan in effect at the time the Agreement was
made. In 1980, Taylor changed its insurance carrier to United
of Omaha. The United of Omaha policy remained in effect until
January of 1987. On January 28, 1987, Taylor obtained new
group health insurance from New York Life.
Between 1979 and 1986, Miller made claims for medical care
for himself and his dependents and benefits were provided.
When Taylor changed its health insurance carrier from United
of Omaha to New York Life on January 28, 1987, Miller's name
was not submitted for coverage under the New York Life policy.
As of that date, Miller was no longer a participant in
Taylor's medical reimbursement plan. Miller, however, was not
aware that he had been dropped from the plan.
In June of 1987, Miller submitted medical bills to Taylor
for payment. On July 7, 1987, Taylor notified Miller that it
was denying the claims because Miller was not included ...